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Comment by dreyfan | Hacker News Reader

Zillow is the brokerage and they take fees when they buy the home from their users and depending on how they sell it they often take fees on that side of the transaction too. So when you see that Zillow "bought" a home at $500,000, the seller actually gets closer to $450,000 on average. They of course want the $500k price tag to hit the MLS records though, since it supports the endlessly appreciating housing market narrative.

It's not as simple as a buy-low sell-high home flipping strategy.

> "Altogether, Zillow Offers fees can add up to as much as 22% of your home’s sale price — much more than you’d pay while selling on the open market."

[1] https://www.realestatewitch.com/zillow-instant-offers/

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That's basically all real estate agents, and if someone selling their home to zillow only pays 10% total (since sellers typically pay agents for both sides of the transaction) that isn't a bad deal for the home seller at all.

Edit: I misremembered commission costs. 10% on the sale of a house is rather high unless the seller is covering additional costs as well.

I understand that, I'm not suggesting it's a scam or anything (though typically in the US a home seller pays 3% to the buyers agent and 3% to the sellers agent). I'm saying when Bloomberg exclaims "Zillow is selling homes at a loss!" they're missing the point of the strategy. As long as the price they sell for still exceeds the fees they take, it's a profitable move.

Also many of these transactions do not involve traditional brokerages whatsoever. People sell their homes directly to Zillow and other people buy the homes directly from Zillow.

3%? 6%?

My last house sale in the U.K. was 0.5% of the sale price to the estate agent (the buyer doesn’t pay anything). Legal fees on my side for selling and buying were another 0.5%, and a little for a survey. Total cost to sell and buy well under 1.5%.

Why do you get for that 6%?

6% has been the norm in the US for a long time. It is absurdly high and is why opportunities like iBuying exist.

In the UK, there is no wiggle room for such ventures, but as the transactional costs in the US is steep, the market was ripe for disruption. You can usually expect your total transaction costs to be 8-10%, so there is a lot of margin in there for Zillow/Opendoor to operate as the only intermediary (buyer & seller agent, lender, stager, etc).

Can confirm that 6% is the norm and average cut the agents take in the US. Typically 3% for seller's agent and 3% for buyer's agent. The entire commission is paid by the seller so the buyer never sees this, though technically those fees are baked into the final price they pay for the house. RedFin and others are trying to disrupt this model but made very little inroads so far.

At a minimum, the real estate agent manages coordination. Good agents are familiar with the local ordinances and can save you time and hassle (a city I once lived in insisted that homes had to have a city inspector go through prior to listing, and neither I nor my agent knew until we found out from a buyer's agent).

Great agents will organize staging, professional photos (some companies put up "3d" walkthroughs on their websites), open houses, advertising, recommend investing in remodelling to list at higher prices (or when to pass on those things depending on the local market).

Sometimes, paying an agent more than makes up for the cost by getting a better sale price. Other times, it is kinda pointless.

(If you didnt know, seller customarily pays for both agents as well in the US).

That was what the traditional agent told me a few months ago. I asked how much he sold an identical house next door to me 2 months earlier, he didn’t know. He wanted an obscene 1.5%.

Turns out it was for 3% less than I got with my online broker which cost half what he wanted (and did professional photos, I didn’t want the 3D walkthrough for £99 extra, we don’t do open houses in the U.K.

10 percent is insane, most sellers with an agent pay 4-6 percent

And honestly the cheapest way to get it done is a sign in your yard, a flat fee broker to get it on the MLS and a lawyer to finalize the sale

Zillow and agents are not doing Jack shit to earn the commission they get

after obtaining a junior real estate credential in California, my irreverent twenty-something colleague told me with no equivocation "a trained monkey could sell these houses"

In a hot market, totally. Get out in the sticks or a smaller town in normal or slow days, and good agents will do a fair bit of legwork to sell a house.

It's been so long since we've had a real down market. People are going to be shocked when it happens again.

Down markets are all over in more rural places.

For about ten more minutes.

In a hot market, selling without an agent is easy. In a normal market, they can help quite a bit.

On the flip side, buying with an agent is handy in a hot market, because they can help you get bids in by having access to sellers realtors and knowing in advance when a home is coming on the market.

That said, my last purchase definitely didn't need the involvement of a realtor at all.

(You're totally right that I misremembered the 10% number, btw).

I've sold two houses in normal markets without an agent doing what the above poster mentioned. I talked to a handful of seller agents and none could articulate any value over just doing a flat-fee MLS listing. Some were completely unwilling to come down to 4 or 5% commission and typically the ones who insisted on 6% also insisted on listing the house below market value.

I was more than happy to plop down a couple hundred to list on MLS and pay the buyer agent a 2% commission. We had a pretty boilerplate purchase agreement and then the title company handled the rest.

Personal story, I sold my home in Austin in July of this year. I was going to sell it myself but instead found a 1% broker. It was listed at $525k and I would have taken $495k. Because I don't negotiate for a living and because $495k is a lot in comparison to what I paid, _anyone_ could have easily talked me down from $525k. But because they called the broker instead of me the property sold for $547k. The broker also encouraged me to offer only 2.5% to the buyer agent instead of the 3% that is typical.

So yes, if you can keep your cool, keep your mouth shut, forget how much you already profited, and have a bit of greed in you, then sell it yourself. Otherwise outsource this job and pay as little as you can for it.

Its not just in hot markets. That is myth

Things my agent did:

* hire and manage a staging company

* hire and manage a photographer

* print and distribute printouts

* hire and manage cleaner, landscaper, other various people to get the house ready and appealing

* use personal network to get the word out to other agents

I could have done most of this on my own, but I'd be cold calling random contracters. My agent had relationships, got the work done fast and at good price. Also I'm convinced all their work added at least 20% to final selling price. Maybe more.

When I sold my last house, about seven years ago, we got a free consultation from Redfin. "Should we fix anything or stage it?" we asked. "Meh, don't bother, just put it up for $250K and we can sell it."

Just to be sure, we consulted the realtor who had helped us buy our new house, and she convinced us to do maybe $15K of remodels on the kitchen and bathroom (for which she sourced the contractors) then told us how to stage it and put some little shrubberies up front, etc. Final selling price was $350K.

To me, that's the difference between places like Redfin or Zillow vs. an agent.

Staging is actually counterproductive

Anyone can take pictures

Most people already have the printout via some website

The network connections is a myth. If it's on MLS everyone that counts is already seeing it

Anyone can push a shutter button. Very few people can take pictures that really sell a unique property. If you're listing a cookie-cutter 2 bedroom urban condo then pictures don't matter much because buyers pretty much already know what they're getting. If you're listing a rural luxury property with acreage and a view then good pictures matter a lot.

Same thing with staging. It's counterproductive for some properties and almost essential for others. You have to know the local market and target buyers.

If you actually paid 20 percent for that I have a bridge to sell you

They are not saying they paid 20% fees for that. They are saying the agent boosted the sale price by 20%, more than paying for the agent's fee.

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